Where does Russia keep its huge gold reserves?

Illustration photo: Global Look Press

Amid growing uncertainty in global financial markets due to geopolitical and trade conflicts, countries and investors have traditionally sought safety in gold.

Several countries have begun repatriating gold held abroad or actively buying the precious metal in recent years.

Last year, the German Central Bank (Bundesbank) “repatriated” 674 tons of gold reserves deposited in Paris and New York since the Cold War.

Earlier this year, Turkish media reported that in 2017 Ankara brought in 220 tons of gold from abroad, of which 28.7 tons were brought back from the United States.

At the same time, the National Bank of Hungary announced plans to repatriate 3 tons of gold reserves in London.

In recent decades, central banks around the world have switched from being net sellers of gold to net buyers, with official activity in the sector jumping 36% to 366 tonnes in 2017 from the previous year.

According to the World Gold Council, demand in the first quarter of this year also increased by 42% compared to the same period last year, with transaction volume reaching 116.5 tons - the highest in the first quarter of any year since 2014.

Russia, currently ranked 5th among countries with the largest gold reserves with 2,000 tons of gold, has been the country that bought and sold the most of this precious metal for the past 6 years.

In 2017, the country's central bank bought 224 tons of gold bars, with 106 tons traded in the first six months of that year. The Bank of Russia explained the strategy as part of diversifying the country's reserves away from the US dollar.

Nearly two-thirds of Russia's gold is believed to be stored in the Central Bank vaults in Moscow, with the remainder held in the northern city of St. Petersburg and the city of Yekaterinburg near the Ural Mountains. Russia's gold is believed to be stored in bars weighing between 100g and 14kg.

The country’s love affair with gold dates back to the Tsarist era, when the precious metal was used to prop up the national currency. By 1894, the Russian Empire’s gold reserves had reached 1,400 tonnes, and remained the world’s largest until 1914.

Gold holdings were significantly reduced by World War I and then the Russian Revolution, when Russia had to repay debts to foreign banks. Most of the Tsarist-era reserves were spent by the Bolshevik government on food and industrial equipment, leaving only 150 tons of gold in the treasury by 1928.

During Stalin’s reign, the country’s gold bullion reserves rose again, as the Soviet leader saw the precious metal as one of the key pillars for rapid economic modernization. Gold reserves rose to 2,500 tonnes during this period, but gradually declined to just 290 tonnes by October 1991.

Russia's gold mines are mainly located in the Magadan region in the Far East. The precious metal is also mined in Chukotka, Yakutia, Irkutsk and the Amur region, Zabaykalsky Krai, as well as in the Sverdlovsk and Chelyabinsk regions and the republics of Buryatia and Bashkortostan.